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Housing developers take huge risks

LETTER | I refer to the article Housing industry trapped in its own folly.

The writer has rightly pointed out that all the measures thus far to provide affordable housing are nothing more than fluff.

And it will remain fluff while the present policies remain as the current policies are not even designed to make them affordable in Malaysia.

However, it is certainly not only developers who are to blame.

It is true that there are developers who became millionaires after a single, successful project.

It is, however, also true that many a developer has been taken to the cleaners when his project was not so successful.

The problem in this country is that projects need to be huge for any developer to take development risks.

The reason is the government's attitude that everything from clearing and converting the land to providing infrastructure is the developers' responsibility.

Developers even have to provide land and build the infrastructure for privatised utilities like power and sewerage companies and these people then come in and charge the buyers for their private profit.

To do development, a developer needs economies of scale hence the huge projects and consequent risks and high prices.

As everyone knows, this also encourages developers to get “little Napoleans” to bend rules for their project's benefit, often at the public's expense.

The dearth of playing fields and open spaces is a testimony to such “little Napoleanism” at work, with the proposed Taman Rimba Kiara development a prime example.

The solution, as in so many countries, is for the government and utility companies to provide their own infrastructure for which each side can contribute their own share.

That way, developers minimise risk and costs while the authorities can open up land and continue with planned infrastructure developments to keep the local economies humming with the public being served by adequate infrastructure.

A situation of buyers moving in without infrastructure or utilities being connected should never happen.

In Australia, developers market a dozen or so homes at a time – profitably - in a “ready-for-occupation” condition.

Even boutique developers can then come in to cater to niche markets.

A fundamental rethink of procedures is called for without input from entrenched developer interests, in my opinion.


The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.

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